Bundestag gives backing for bailout of Spanish banks

GERMAN FINANCE minister Wolfgang Schäuble will add Berlin’s support for bailing out Spanish banks today after receiving the backing of a large Bundestag majority yesterday evening.

Some 473 MPs voted in favour of contributing almost €30 billion in German loans and guarantees to the Spanish package of up to €100 billion, running over 18 months.

But opposition was more marked than in previous bailout votes: some 97 of a total of 620 MPs opposed the move, including 22 from the coalition ranks, with a total of 13 abstentions.

The government failed to get an absolute, so-called “chancellor” majority, though six coalition politicians were missing from the midsummer parliamentary recall.

Before the vote, Mr Schäuble said financial markets had “doubts” about Spain’s economic health and the bailout would help Madrid buy time to complete cutbacks and reforms already under way.

“Spain is on the right path to solid state finances but this progress is endangered by insecurity over its financial sector,” he said.

“We have a strong interest in allowing Spain to continue to reform.”

He assured MPs that full liability for all loans lay with the Spanish state, dismissing speculation in some quarters that recapitalising euro zone banks would let states off the hook for liability.

Mr Schäuble denied this was the case with the Spain bailout, insisting European leaders would discuss this issue only after a European banking regulator was in place and operating to everyone’s satisfaction.

“Anyone who talks about immediate, direct refinancing of banks through the ESM (bailout fund) or of collective liability for banks in the euro system is shooting his mouth off,” he said, a dig at euro zone bailout chief Klaus Regling.

Opposition leader Frank Walter Steinmeier, parliamentary head of the Social Democrats (SPD), said his party would support the bailout for euro zone stability – but as a show of support for the euro zone and not for the government.

He accused Angela Merkel’s coalition of unsettling voters by spinning a “fairy tale” of fiscally prudent Germans surrounded by fiscally reckless neighbours.

“Germany is no blessed isle. The crisis will hit even export-driven countries [such as Germany] and, as one export market after another hits the skids, we cannot rule out that we will be dragged down,” he said.

Mr Steinmeier put the government on notice that the SPD would not continue to support euro zone bailouts for banks unless creditor involvement was agreed.

Only the opposition Left Party, which favours transferring banks to public ownership, voted en bloc against the Spanish bailout.